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Original-Research: UmweltBank AG - from GBC AG
Classification of GBC AG to UmweltBank AG
Company Name: UmweltBank AG
ISIN: DE0005570808
Reason for the research: Research Report (Anno)
Recommendation: BUY
Target price: 9,60 EUR
Target price on sight of: 31.12.2024
Last rating change:
Analyst: Cosmin Filker, Marcel Goldmann
- Return to profitability expected after transformation year 2024
- Realignment bears fruit
- Interest margin expected to bottom out
With the publication of their 2023 Annual Report, UmweltBank AG has
confirmed the preliminary figures published in March. As previously
announced, new lending business declined and was down from the previous
year at EUR 459 million (previous year: EUR 623 million). One reason for this
was the increase in the capital surcharge to 3.7% (31.12.22: 1.5%), which
prevented a higher level of new lending.
In addition to lower growth momentum in loans, further decline in the
interest margin also led to an expected fall in net interest income to EUR
41.11 million (previous year: EUR 58.79 million). As the deposit business has
a shorter duration, it reacts more strongly to interest rate increases,
which led to higher interest expenses. In addition, interest expenses for
funds borrowed from the ECB and KfW, which also represent an important
refinancing block for UmweltBank AG, also increased. Parallel to the
decline in net interest income, the financial result fell significantly to
EUR 7.17 million (previous year: EUR 24.83 million). This represents a
normalisation, after the previous year's figure was strongly positively
influenced by the sale of an investment in a wind farm company amounting to
around EUR 20 million.
The sharp decline in income was accompanied by an equally sharp rise in
costs in the 2023 financial year, which led to a significant decline in EBT
to EUR 1.10 million (previous year: EUR 39.21 million). The main reason for the
increase in costs was the change in the core banking system, which was
associated with extraordinary expenses of EUR 10.14 million. In addition,
UmweltBank AG recorded a significant increase in personnel costs.
The current 2024 financial year is to be regarded as a year of
transformation. This is due to the fact that further investments in
technology and the organisational structure are planned. In addition, the
focus will be on expanding private customer deposits, which will be
accompanied by increased marketing expenditure. The company will also
continue to push ahead with digitalisation in the current financial year
and invest more in this area. The investments and subsequent costs in
connection with the migration of the core banking system totalling EUR 4
million are expected to lead to earnings before taxes of EUR -15 million and
EUR -20 million respectively.
The higher costs are offset by a turnaround in the interest and financial
result. UmweltBank AG has focussed on expanding its deposit business with
private customers, which is already bearing fruit. In the first three
months of 2024, around 8,000 new customers and customer deposits totalling
around EUR 250 million were acquired. Their aim is to reach the 500,000
customer mark by 2028. Increasing customer deposits should enable an
expansion of the lending business on the one hand and, in particular,
generate interest income from the investment of customer funds (ECB; bonds)
on the asset side.
In future, their lending business will focus on corporate customers. New
business of EUR 250 million is expected for the current financial year. New
lending business is to be increased by releasing capital tied up in equity
investments. In addition, the capital surcharge should return to normal
levels once the regulatory requirements have been met, which will also
enable an increase in new lending business. The gross volume of new
business is expected to increase to over EUR 1.0 billion by 2028. Net
interest income from the lending business should also improve in line with
the expected increase in the interest margin. The expiry of low-interest
loans and the expected stable interest rate trend should contribute to
this.
The financial result should increase in the coming financial years, not
least due to the continuous reduction in the investment business. Two wind
farm investments and one property investment were already sold at a profit
in the first quarter of 2024. Further disposals are planned on an
opportunistic basis. Net commission and trading income should also benefit
from rising customer deposits and also increase slightly.
Following a significant increase in total costs in the 2024 financial year,
a rapid return to profitability is expected from the coming 2025 financial
year. We expect EBT of EUR 5.75 million for the coming 2025 financial year
(2024: EUR -15.90 million) and EBT of EUR 20.49 million for the 2026 financial
year.
We have valued UmweltBank AG using a residual income method and determined
a fair value of EUR9.60 per share. Based on the current share price of EUR
6.44, we continue to assign a BUY rating.
You can download the research here:
http://www.more-ir.de/d/30099.pdf
Contact for questions
GBC AG
Halderstraße 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de
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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR Beim oben analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (1,4,5a,6a,7,11); Einen Katalog möglicher Interessenkonflikte finden Sie unter:
https://www.gbc-ag.de/de/Offenlegung
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Date and time of completion of the study: 26.06.2024 (08:45 am)
Date and time of the first dissemination of the study: 26.06.2024 (10:00 am)
-------------------transmitted by EQS Group AG.-------------------
The issuer is solely responsible for the content of this research.
The result of this research does not constitute investment advice
or an invitation to conclude certain stock exchange transactions.
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